Edited version of your written advice

Authorisation Number: 1051418721291

Date of advice: 6 September 2018

Ruling

Subject: Work related expenses - Travel

Question 1

Can you claim all travel expenses, including airfares, tour costs and meals, in respect of a Music Tour as self-education expenses in the year they are incurred assuming the taxpayer continues to derive salary income from teaching music in that year?

Answer

No

This ruling applies for the following period(s)

Year ended 30 June 2019

Year ended 30 June 2020

The scheme commences on

1 July 2018

Relevant facts and circumstances

You are employed by a Department of Education as a Music teacher.

You have held a music teaching positon in excess of ten years.

You are required by the Department of Education to maintain accreditation through the completion of at least 100 hours of Professional Development (PD) in a three year period including a minimum of 50 hours of a Professional Authority registered PD.

You have identified an overseas Tour. The tour is subject to itinerary changes including but not limited to the availability of flights and bookings, tickets to performances and workshops and practitioners.

The tour itinerary includes:

Day 1 Arrive in a city meet and greet with tour leader and participants with dinner included.

Day 2 Visit a performing arts centre and participate in a workshop. Afternoon is a choice to attend Choral performance at a Cathedral or perhaps visit a Museum. In the evening attend a Musical.

Day 3 Guided tour of an Opera House. Afternoon explore a gallery or attend a lunchtime recital at a church. In the evening attend a performance at an Opera House.

Day 4 Participate in a choral workshop. Afternoon - visit a Museum. Evening attend a classical music performance.

Day 5 Fly to a city, then travel onto a city, included is a group dinner where there may be an opportunity to attend a non-ticketed event at a Jazz Festival.

Day 6 Guided walk of a city old town area. Evening performance at a Jazz Festival.

Day 7 Free day.

Day 8 Coach to a city. Walking tour including highlights. Evening attend an Opera summer Festival

Day 9 – Free morning. Afternoon visit an Opera Museum.

Day 10 Exploring guided tour of a city

Day 11 Explore a city by foot – free time. Evening at a Music Festival.

Day 12 Day trip to a city including a visit to a Museum. Evening attend an opera of a Music Festival

Day 13 Transfer to a city Airport tour concludes.

Your spouse is not accompanying you on this trip.

You are not participating in any additional personal travel.

You are upgrading to a single room supplement due to personal reasons of privacy and comfort.

Expenses are envisaged to be a total cost including the tour with the single supplement and return airfares.

Relevant legislative provisions

Income Tax Assessment Act 1997 (ITAA) section 8-1

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature.

To satisfy the first limb of section 8-1 of the ITAA 1997, the loss or outgoing must be relevant and incidental to the operations or activities from which the assessable income is produced: Ronpibon Tin NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; 8 ATD 431; (1949) 4 AITR 326. This principle is also expressed in terms of there having to be a sufficient nexus or connection between the outgoing and the production of assessable income.

Taxation Ruling TR 98/9 sets out the Commissioner's view on self-education expenses.

Self-education expenses are deductible if:

● they have a relevant connection to your current income-earning activities

● your income earning activities are based on the exercise of a skill or some specific knowledge and the subject of self-education enables you to maintain or improve that skill or knowledge, and

● the study of a subject of self-education objectively leads to, or is likely to lead to, an increase in your income from your current income-earning activities in the future. However, it should be noted that such a finding is not a prerequisite for deductibility.

TR 98/9 also explains that expenses incurred on overseas study tours or sabbaticals, on work-related conferences or seminars, or attending an educational institution are deductible if the necessary connection with a person’s income producing activity exists. However, the ruling also explains that if the subject of the self-education is too general in terms of the taxpayer’s income-earning activities, the necessary connection between the self-education expense and the income earning activity does not exist.

The Taxation Boards of Review have seen a number of teachers seeking income tax deductions for overseas travel expenses. Most of the claims were rejected because the teachers were not able to establish a positive connection between the overseas travel and the performance of their duties of employment as teachers.

In Case U109 87 ATC 657 the taxpayer was a science teacher who specialised in geology and was the head of the school science department. He undertook a 17 day trip to Indonesia organised by a natural history museum society of which he was a member. During the course of the trip, he visited several volcanoes and other geological sites, and attended a geological congress. He also visited some tourist attractions. The taxpayer took many slides of the geological sites and prepared a taped commentary which he used in his teaching on his return. The Administrative Appeals Tribunal (AAT) examined previous court decisions dealing with teachers who had claimed for the cost of overseas travel. It concluded that although the taxpayer may have been a better teacher because of the travel, this fell short of the sufficient connection required between the travel and their income earning activities. The AAT stated that some taxpayers are fortunate in finding personal and recreational satisfaction in their field of endeavour and that in this case the trip was recreational in character and not deductible.

The circumstances of your travel are similar to travel undertaken in the case noted above. We acknowledge your reasons for undertaking the travel are to enable you to enrich your teaching and understanding and appreciation of music. The trip may broaden your knowledge and benefit you as a teacher. However, the courts have held that these reasons are not enough to demonstrate a sufficient connection between the travel and the income producing activities.

Whilst this tour is marketed to music teachers specifically, there is little or nothing about the tour that is specifically of interest only to music teachers. The knowledge that you will gain would be too general in nature for the expenses to be incurred in the course of gaining your assessable income. It is acknowledged that you will attend a number of Museums relevant to the history of Music as well as being present for Relevant Festivals, attending Operas and a Musical. Our view is that the tour is generally private in nature; the tour offers efficient co-ordinated travel to points of interest for music orientated individuals. However it is considered that the essential character of the tour is recreational in nature.

Therefore your trip is considered to be too general and not have a sufficient connection to the duties as a music teacher. Accordingly, you are not entitled to deduct expenses incurred in relation to the overseas study tour